Update on Merger with Polymetals - Notice of Meeting

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30 July Shareholder Meeting – Your Vote is Important The Scheme – which will involve SXG issuing a total of 458,537,981 new SXG shares to Polymetals shareholders – is subject to a number of conditions, including the approval by SXG shareholders of Resolution 1 in the enclosed Notice of Meeting, approval of the merger by Polymetals shareholders and the satisfaction of other conditions precedent including court approval. If the merger proceeds, Polymetals shareholders will hold approximately 52.9 per cent of the Merged Group, of which interests associated with Polymetals’ non-executive Chairman and largest shareholder, Mr David Sproule (“Sproule Interests”), will comprise approximately 26.17 per cent of the Merged Group as a result of the Sproule Interests’ current shareholding in Polymetals. Existing SXG shareholders will hold approximately 47.1% of SXG post-merger. The SXG shares to be issued to the Sproule Interests under the merger will be issued on the same basis and terms as to all other Polymetals shareholders. Following consultation between SXG and ASIC, SXG’s Board has decided that SXG shareholders should be given the opportunity to consider the effect of the acquisition by the Sproule Interests of a substantial interest in the Merged Group, if the Scheme is implemented. This approval is being sought from shareholders at a general meeting which has been convened for 30 July 2013. Enclosed with the Notice of Meeting is an Independent Expert’s Report, which concludes that the issue of SXG shares to the Sproule Interests (as a consequence of which the Sproule Interests will obtain a relevant interest in SXG of approximately 26.17%) is fair and reasonable to SXG shareholders (see below). The Notice of Meeting also includes two resolutions relating to the ratification of the issue of SXG shares as part of a placement undertaken in October 2012 and the issue of options to RMB Australia Holdings Limited in March 2013 in relation to the loan facility for the acquisition of the Sandstone Gold Project. These two resolutions are unrelated to the merger with Polymetals. Your vote is important as the merger with Polymetals can only proceed if SXG shareholders approve the resolution for the issue of new SXG shares to the Sproule Interests. Your Board strongly believes that the merger is in the best interests of SXG shareholders, particularly given that current market conditions make it very difficult for junior resource companies to raise capital to progress their projects. Should the merger not proceed, your Directors are of the view that SXG’s ability to develop its flagship asset, the Marda Gold Project, would be negatively impacted. The Independent Expert concludes the transaction is fair and reasonable to SXG shareholders The Independent Expert, BDO Corporate Finance Pty Ltd, considers that the issue of new SXG shares to the Sproule interests is integral to the merger and is fair and reasonable to SXG shareholders. BDO has concluded that the key advantages of approving the transaction are: 1. The Merged Group will be of significantly larger scale than the existing SXG – with a combined potential production profile of 69,000oz per annum and a bigger and more diversified asset portfolio. 2. The Scheme is a merger of two similar sized entities with equal Board representation in the Merged Group – shareholders of each company will emerge with holdings of similar weighting to the current market capitalisation of the two companies and with a Board drawn equally from the two companies.
3. Access to the cash reserves of Polymetals – the significant cash reserves of Polymetals will be available to the Merged Group to provide funding certainty for the Marda Gold Project and to allow immediate pursuit of those development projects prioritised by the Directors. 4. Potential for synergies – combining the companies should allow efficiencies to be realized in terms of consolidating Western Australian-based activities and corporate and administrative costs, resulting in annualized savings estimated at $1.95 million. 5. Strong more diversified development pipeline – in addition to the advanced Marda and Mt Boppy projects, both SXG and Polymetals have a portfolio of potential projects giving the directors significant choice in the projects to be prioritized. 6. Shareholders will benefit from increased market relevance and liquidity of shares – the Merged Group will have a more significant market presence and there is likely to be greater liquidity, making it easier for shareholders to realize the value of their shares should they choose to sell. 7. Technical expertise associated with the Sproule Interests – David Sproule, Polymetals’ current nonexecutive Chairman, will bring technical expertise to the Merged Group including expertise in refurbishing and reconstructing small gold plants and operating small gold plants. The Sproule Interests also bring with them a committed vision for growing small companies as well as cash reserves. 8. Diversified and larger group of assets – the Merged Group will hold a larger pool of assets, providing the Company with greater flexibility and more options to divest or develop a number of projects. Your Directors believe that the proposed merger with Polymetals provides the best possible pathway for SXG to develop and realize value for shareholders from its advanced Marda Gold Project and surrounding exploration package, while also giving it exposure to Polymetals’ assets including the Mt Boppy Project. I am excited about the opportunities that lie ahead for the Merged Group and believe that the merger will unlock significant long-term value for shareholders. I look forward to your support at the upcoming general meeting. Your Directors will be available from 12pm to 5pm on 17 July 2013 to discuss by phone this important phase in the progression of your company ahead of the general meeting on 30 July, and invite you to call them on (08) 9215 7600. In the meantime, if you have any queries about the merger or about the general meeting, I encourage you to contact our Managing Director, Glenn Jardine, or Chief Financial Officer, Stephen Jones on (08) 9215 7600. Yours sincerely Samantha Tough Non-executive Chairman Southern Cross Goldfields Ltd
Page 1 and 2: ASX ANNOUNCEMENT / MEDIA RELEASE Fr
Page 3: ABN 71 124 374 321 U16,162 Colin St
Page 7 and 8: Disclaimer and Important Notice •
Page 9 and 10: SXG - Well Placed • • •
Page 11 and 12: SXG and PLY - Key Merger Metrics
Page 13 and 14: Indicative Merger Timetable •
Page 15 and 16: A Diversified Portfolio of Australi
Page 17 and 18: Marda Project • Rare greenfields
Page 19 and 20: Northern Gold Corridor Targets - Dr
Page 21 and 22: WA Gold Assets - Turner River • P
Page 23 and 24: Mt Boppy - A Near-Term Production O
Page 25 and 26: ASX Code: Investor Presentation J
Page 27 and 28: Pro Forma Gold Reserve Statement Pr
Page 30 and 31: ABN 71 124 374 321 U16,162 Colin St
Page 32 and 33: - 3 - Notice of General Meeting Not
Page 34 and 35: - 5 - Proxy appointment, voting and
Page 36 and 37: - 7 - 1.2 Rationale for the Merger
Page 38 and 39: - 9 - 1.5 Implementation of the Mer
Page 40 and 41: - 11 - in terms of assets and marke
Page 42 and 43: - 13 - (a) You may not agree with t
Page 44 and 45: - 15 - (b) the Technical Specialist
Page 46 and 47: - 17 - (a) Identity of the person r
Page 48 and 49: - 19 - (i) Other matters The Direct
Page 50 and 51: - 21 - The purpose of Resolution 2
Page 52 and 53: - 23 - Schedule 1 - Information abo
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- 25 - Woodside Energy Ltd and Dire
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- 27 - Stephen Jones (Chief Financi
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- 29 - In accordance with ASIC Clas
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- 31 - million SXG Options which ha
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- 33 - Schedule 2 - Terms & Conditi
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- 35 - the Company out of profits o
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- 37 - Glossary In this Explanatory
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- 39 - Peak Litigation The litigati
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- 41 - Annexure A Refer enclosed In
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Financial Services Guide 21 June 20
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TABLE OF CONTENTS 1. Introduction 1
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2. Summary and Opinion 2.1 Purpose
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The respective advantages and disad
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elieves that there are sufficient r
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Existing SXG PLY Capital structure
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Sandstone Exploration Potential In
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5.3 Historical Balance Sheet Southe
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in tenement acquisition costs also
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The current SXG unlisted options on
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Drew Hill - White Dam Gold Project
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6.4 Historical Statement of Compreh
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At 31 March 2013, PLY have recorded
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Gold Demand/Supply Mined Metric ton
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• On 9 August 2012, Regis Resourc
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eport to be used in our report. At
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eport to be used in our report. At
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Funding assumptions SXG has receive
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AMC modelled two cases for the Mard
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Marda Project Case 2 Units 31-Dec-1
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uildings and water supply. The $38.
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Considering the valuation outcomes
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Southern Cross Goldfields Limited V
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We calculated the corporate costs o
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SXG share price and trading volume
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On 28 February 2013 SXG announced t
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Control Premium The concept of a pr
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We note that SXG’s EV/resource mu
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The Adjusted Mt Boppy Model was pre
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2013 2014 2015 2016 2017 2018 Gold
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AMC and management of PLY advise th
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Mt Boppy Case 2 Mt Boppy Project Ca
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Mt Boppy Case 2 Sensitivity analysi
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Polymetals Mining Limited Value of
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projects. PLY has discounted the to
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The Merged Entity - SXG Low Preferr
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Note f: Minority discount Following
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12. Is the Transaction fair In asse
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As set out in section 12, the Trans
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15. Sources of information This rep
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esponsible for conducting appropria
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Meadowhead Meadowhead Indemnity The
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APPENDIX 2 - VALUATION METHODOLOGIE
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APPENDIX 3 - DISCOUNT RATES SXG We
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Having regard to the above we consi
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Merged Entity Determining the corre
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associated (relative to the compara
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APPENDIX 4 - TECHNICAL SPECIALIST V
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AMC Consultants Pty Ltd ABN 58 008
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BDO CORPORATE FINANCE (WA) PTY LTD
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Update on Merger with Polymetals - Notice of Meeting

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